What is a stock?

Before I answer this question, I’d like to take a moment to discuss stocks and stock market trading. I have made a lot of money trading in the stock market, and most of my skills have come from research and understanding what the market is. There is a lot of randomness and nonsense that comes out of a lot of articles and numbers. One needs to learn how to filter this information out.

A stock is basically part ownership in a company. What this means is a company has a few alternatives in terms of how it can raise money. It can issues bonds and it can sell stocks. We will discuss bonds later. If a company is started by 2 people and they divide the company equally. It technically means that all the shares of the company are owned by both of them. If they would like to raise more money for their company, both owners can issue an Initial Public Offering (IPO) and sell off some of their shares to others.

Once you own a stock, you technically are entitled to profits that the company has as a result of you owning the stock. This is called a dividend. Dividends are usually paid out every quarter and vary by every company in terms of how much they share with their stockholders.